Company Overview - Shenzhou International is one of the largest vertically integrated knitwear manufacturers globally, producing approximately 430 million pieces of knitwear annually[9]. - The company has over 85,700 employees and operates factories covering over 5.38 million square meters[9]. - Major clients include renowned brands such as NIKE, UNIQLO, ADIDAS, and PUMA, with markets spanning China, Japan, Asia Pacific, Europe, and the US[9]. - Shenzhou International was listed on the Hong Kong Stock Exchange in November 2005 and is included in several indices, including the Hang Seng Composite Index and MSCI Index[10]. - The company has received multiple awards, including recognition as one of the "Top 100 HK Listed Companies" in 2012, 2015, and 2016[12]. - In 2019, Shenzhou International was named in the "Listed Company Awards of Excellence 2019" by Hong Kong Economic Journal[13]. Financial Performance - Total sales for 2019 reached RMB 22,665,272, an increase of 8.7% from RMB 20,950,205 in 2018[19]. - Profit for the year was RMB 4,958,536, representing a growth of 10.4% compared to RMB 4,492,543 in 2018[16]. - Gross profit margin decreased to 30.3% in 2019 from 31.6% in 2018[16]. - Net profit margin improved slightly to 21.9% in 2019 from 21.4% in 2018[16]. - Non-current assets increased to RMB 11,360,620 in 2019, up from RMB 9,411,627 in 2018[16]. - Current assets rose to RMB 20,494,238, compared to RMB 18,140,427 in the previous year[16]. - Total equity reached RMB 25,191,327, an increase from RMB 22,454,279 in 2018[16]. - Cash and cash equivalents increased to RMB 5,060,896 in 2019 from RMB 3,565,916 in 2018[16]. - The profit attributable to owners of the parent for the same period was approximately RMB 5,095,206,000, reflecting a year-on-year increase of approximately 12.2%, or approximately 14.1% when excluding the negative impact from the retail business[41]. - Earnings per share for the year were RMB 3.39, with cash and cash equivalents amounting to approximately RMB 5,060,896,000 as of 31 December 2019[41]. Market Trends and Challenges - The apparel industry in China faced a challenging operating environment in 2019, with exports of apparel products declining by approximately 4% year-on-year, particularly to the US, EU, and Japan[43]. - Despite the challenges, the Group focused on enhancing long-term competitiveness by expanding production capacity and improving efficiency in overseas factories[39]. - The current difficulties in the industry are viewed as opportunities for growth, promoting quality-oriented development and enhancing competitiveness through innovation and flexible manufacturing[43]. - The textile and apparel industry in China faced multiple pressures in 2019, including slow global economic recovery and rising operational costs[54]. - The domestic demand growth has significantly slowed, impacting market demand and export enterprises[54]. Production and Operations - The company aims to be the most competitive knitwear manufacturer globally, focusing on high-quality production through OEM and ODM methods[8]. - Shenzhou International has strategically established production bases in Ningbo, China, and Tây Ninh, Vietnam, enhancing its manufacturing capabilities[9]. - The Group's global production layout and vertical integration have mitigated the adverse impacts of COVID-19, allowing full production capacity to be resumed in a short period[45]. - The Group's operational management has matured, and resource allocation in domestic bases has been optimized, leading to reduced energy consumption levels[39]. - The Group plans to moderately increase domestic fabric production capacity to replace imports from overseas bases, aiming to balance upstream and downstream productivity[76]. Corporate Governance - The Company has complied with all code provisions of the Corporate Governance Code throughout the year ended December 31, 2019[132]. - The Board includes at least three independent non-executive directors, with one possessing appropriate professional qualifications or financial management expertise, meeting all regulatory requirements[137]. - Continuous professional development for Directors is arranged to update their knowledge on Listing Rules and related legal requirements[136]. - The Company adopted a shareholders' communication policy effective from March 26, 2012, allowing shareholders to propose candidates for Director elections[143]. - The Company has increased transparency and governance standards through continuous training for Directors and staff, and by appointing external professional advisers[131]. Sustainability and Social Responsibility - The sustainability report outlines the company's commitment to environmental protection, social responsibility, and governance practices across its major subsidiaries in China, Vietnam, and Cambodia[195]. - The company aims to become the best garment operator globally, focusing on innovation, automation, and environmental protection as key components of its future development strategy[200]. - The company is committed to creating a green enterprise and achieving sustainable development through ongoing investment in environmental protection[199]. - Stakeholder engagement is prioritized, with internal and external communication channels established to gather feedback and address major issues[197]. Future Outlook - The Group aims to improve employee living conditions and establish motivating remuneration and welfare policies[49]. - The Group emphasizes excellent corporate governance and transparent communication with shareholders and investors[47]. - The Group plans to enhance the sharing of resources between overseas and domestic production bases, improving the independent operational capabilities of overseas factories[123]. - Continuous investment in environmental protection is seen as a future competitive advantage, with plans to increase the use of clean energy sources like solar and wind energy[124][125].

Financial Performance - For the six months ended June 30, 2019, the company reported sales of RMB 10,279.7 million, an increase from RMB 9,159.9 million in the same period of 2018, representing a growth of 12.2%[20] - Gross profit for the same period was RMB 3,174.9 million, with a gross profit margin of 30.9%, compared to a gross profit margin of 32.3% in 2018[20] - Profit attributable to owners of the parent was RMB 2,416.0 million, up from RMB 2,178.9 million in 2018, reflecting a growth of 10.9%[20] - The Group's sales revenue and profit attributable to owners increased by approximately 12.2% and 10.9% respectively, achieving earnings per share of RMB1.61[28] - For the six months ended June 30, 2019, total revenue was approximately RMB10,279,693,000, representing an increase of 12.2% compared to RMB9,159,900,000 for the same period in 2018[36] - The consolidated profit attributable to the parent company for the six months ended June 30, 2019, was approximately RMB 2,416,027,000, an increase from RMB 2,178,871,000 for the same period in 2018[155] Assets and Liabilities - The company's total assets as of June 30, 2019, were RMB 28,294.9 million, compared to RMB 27,552.1 million as of December 31, 2018[20] - The balance of bank borrowings as of June 30, 2019, was approximately RMB2,501,869,000, slightly down from RMB2,516,749,000 as of December 31, 2018[45] - The equity attributable to owners of the parent as of June 30, 2019, was approximately RMB23,554,147,000, an increase from RMB22,298,738,000 as of December 31, 2018[44] - The Group's total assets as of June 30, 2019, were RMB 8,421,687,000, reflecting a solid financial position for future growth[165] Cash Flow and Liquidity - Cash and cash equivalents increased to RMB 3,938.5 million from RMB 3,565.9 million at the end of 2018, indicating improved liquidity[20] - Net cash generated from operating activities for the six months ended June 30, 2019, amounted to approximately RMB2,258,576,000, compared to RMB1,671,542,000 for the same period in 2018[45] - The net increase in cash and cash equivalents for the same period was RMB 346,107,000, compared to a decrease of RMB (855,891,000) in the prior year, reflecting a positive cash flow trend[86] - Cash and cash equivalents at the end of the period reached RMB 3,938,455,000, significantly up from RMB 1,643,650,000 at the end of June 2018, showing strong liquidity[86] Market and Sales Performance - Revenue from sportswear products was approximately RMB7,369,014,000, an increase of approximately RMB1,153,421,000 or 18.6% from RMB6,215,593,000 in the prior year, driven mainly by demand in the mainland China and US markets[32][33] - Revenue from casual wear products rose to approximately RMB2,373,614,000, an increase of approximately RMB209,255,000 or 9.7% from RMB2,164,359,000, primarily due to increased procurement demands in the Japanese market[34] - Revenue in the European market was approximately RMB1,744,244,000, a decrease of 5.8% from RMB1,851,673,000 in the same period last year[37] - Revenue in the Japanese market increased by approximately 8.6%, reaching RMB1,551,343,000 compared to RMB1,428,645,000 in the previous year[39] - Revenue in the US market grew by approximately 19.3%, totaling RMB1,532,246,000, up from RMB1,284,561,000 in the same period last year[39] Operational Efficiency - Accounts receivables turnover period was 58 days, while inventory turnover period was 139 days, showing efficiency in asset management[20] - The Group continued to expand its overseas production capacity while optimizing resource allocation domestically[28] - The Group is expanding upstream fabric processing capacity domestically to reduce fabric imports from Vietnam, aiming for better alignment of production capacities[29] - The Group is building more automated and intelligent logistics and warehousing facilities in China to improve logistics efficiency and accuracy[29] Strategic Outlook - The company plans to continue expanding its market presence and investing in new product development to drive future growth[22] - The management remains optimistic about the outlook for the second half of 2019, expecting continued revenue growth and profitability improvements[22] - The Group aims to accelerate production expansion in Vietnam and Cambodia while increasing the sales share of the domestic market to mitigate risks from exchange rate fluctuations and trade policy changes[62] - The Group will continue to increase investment in product R&D and enhance product innovation capabilities to produce more consumer-satisfactory products[60] Environmental and Regulatory Factors - The tightening of environmental protection policies led to significant increases in raw material prices, impacting the cost structure of Chinese enterprises[27] - The Group aims to minimize adverse environmental impacts during production processes while achieving coordination between enterprise development and environmental protection[59] Employee and Operational Costs - Employee benefit expenses increased to RMB 2,989,622, up 15.8% from RMB 2,581,753 in 2018[143] - The Group's total investment in property, plant, equipment, right-of-use assets, and intangible assets for the six months ended June 30, 2019, was approximately RMB1,202,156,000, with 46% allocated to production equipment and 51% to new factory buildings and right-of-use assets[57] Accounting and Compliance - The company has adopted new accounting standards effective from January 1, 2019, which may impact future financial reporting and compliance[93] - The Group's financial statements for the six months ended June 30, 2019, include notes to the interim condensed consolidated financial statements detailing the accounting policies and their impacts[102]

Company Overview - Shenzhou International is one of the largest vertically integrated knitwear manufacturers globally, producing approximately 400 million pieces of knitwear annually[6]. - The company has over 82,700 employees and operates factories covering over 5,250,000 sq.m. in locations including Ningbo, Vietnam, and Cambodia[7]. - Major clients include international brands such as NIKE, UNIQLO, ADIDAS, and PUMA, with products distributed across markets in China, Japan, Asia Pacific, Europe, and the US[8]. - Shenzhou International was listed on the Hong Kong Stock Exchange in November 2005 and has been included in various indices, including the Hang Seng Index and FTSE China 50[8]. - The company has received multiple awards, including being named one of the "Top 1000 Asian Companies" and recognized for its corporate governance and investor relations[10][11]. Financial Performance - Shenzhou International's financial performance has shown consistent growth, positioning it as a leader in the knitwear manufacturing sector[12]. - Total sales for the year 2018 reached RMB 20,950,205, an increase of 15.8% from RMB 18,085,247 in 2017[16]. - Profit for the year 2018 was RMB 4,492,543, representing a growth of 19.5% compared to RMB 3,759,951 in 2017[16]. - Gross profit margin improved to 31.6% in 2018, up from 31.4% in 2017[16]. - Net profit margin increased to 21.4% in 2018, compared to 20.8% in 2017[16]. - Non-current assets rose to RMB 9,411,627 in 2018, up from RMB 8,886,726 in 2017[16]. - Current assets increased to RMB 18,140,427 in 2018, compared to RMB 15,206,479 in 2017[16]. - Total equity reached RMB 22,454,279 in 2018, an increase from RMB 19,824,653 in 2017[16]. - International sales accounted for 69.9% of total sales in 2018, with significant contributions from Europe (18.1%) and the US (15.5%)[18]. - Sports wear sales were RMB 14,275,643, making up 68.1% of total sales in 2018[16]. Production and Operations - The company has strategically expanded its production capabilities and market reach, enhancing its position in the global textile industry[5]. - Shenzhou International's factories are strategically located to optimize production efficiency and meet international demand[7]. - The Group continued to enhance production automation, improving production efficiency[27]. - The expansion of overseas production bases helped alleviate capacity supply pressure[27]. - The Group's efforts in upgrading facilities led to a continuous decrease in resource consumption levels[29]. - The Group plans to enhance its focus on new product research and development, automation applications, and digital management to improve operational efficiency[36]. - The Group aims to expand the production scale of overseas factories while strengthening local management and technical talent training[36]. Market Trends and Challenges - The textile and apparel industry faced major operating pressures from increasing costs and tightened environmental regulations[27]. - The ongoing China-US trade conflict has created uncertainty in the textile and apparel industry, with over 30% of US apparel imports coming from Mainland China[60][61]. - The labor supply in the Chinese manufacturing industry is tightening, leading to rising labor costs and a shift towards automation[42]. - The Chinese government introduced a series of tax and fee reduction policies to alleviate operating pressures on enterprises, particularly in the textile and apparel sector[32]. Environmental Commitment - The company has committed to environmental protection as a primary social responsibility, aligning with government policies to enhance sustainability[180]. - The Group emphasizes the importance of environmental protection, with many non-compliant textile enterprises being ordered to rectify or shut down[42]. - The Group's hazardous waste emissions totaled 679 tons in 2018, an increase of approximately 5.90% compared to the previous year, with major emissions being waste fluorescent lights and waste ink[187]. - The total electricity consumption of the Group for the year was 586,290,671 kWh, representing a year-on-year increase of 15.20%[187]. - The Group has complied with all relevant laws and regulations regarding environmental protection and emissions during the reporting period[184]. Corporate Governance - The Group is committed to maintaining high transparency and effective communication with shareholders and investors[34]. - The Board proposed a final dividend of HK$0.90 per share, totaling HK$1.75 per share for the year including the interim dividend[30]. - The Company has ensured that at least three independent non-executive directors are on the board, meeting the requirements of the Listing Rules[113]. - The Group's corporate governance functions include developing and reviewing governance policies and ensuring compliance with legal and regulatory requirements[117]. - The Company has established a shareholders' communication policy to facilitate shareholder engagement and proposals for Director elections[119]. Future Strategies - The Group aims to integrate industrial resources from different countries and enhance its capabilities in environmentally friendly production and automation[61]. - The Group aims to increase production capacity at overseas bases to better support customers and mitigate risks from trade environment changes[107]. - The Group plans to invest between USD 100 million and USD 150 million in a new garment factory in Phnom Penh, Cambodia over the next two years[101]. - The Group is committed to continuous technological and management advancements to enhance corporate and social value, as well as sustainable development capabilities[107].